In prepared remarks, Fed Chair Jerome Powell said the latest economic data ‘have come in stronger than expected,’ suggesting interest rates may need to be raised more than planned
The Federal Reserve will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Fed Chair Jerome Powell told U.S. lawmakers on Tuesday.
While some of that unexpected economic strength may have been due to warm weather and other seasonal effects, Powell said the Fed was cognizant it may also be a sign the U.S. central bank needs to do more to temper, perhaps even returning to larger rate increases than the quarter-percentage-point steps officials had been planning to stick with.
But in either case Powell’s comments mark a stark acknowledgment that a “disinflationary process” he spoke of repeatedly in a Feb. 1 news conference may not be so smooth. Powell’s testimony marked his first public remarks on an issue now at the centre of Fed discussion as officials weigh whether recent data will prove to be a “blip,” as one of his colleagues suggested, or be seen as evidence the central bank needs to lean on the economy even harder than currently expected.
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